Saturday, November 28th 2015

What are Utilities?

Utilities are companies that are involved in the delivery, production and service of natural assets. Ranging from water to electricity and natural gas, they are the needed middlemen between consumers and a natural resource. They are often regulated in the US because of their monopolistic position in the market--it would be nearly impossible for a new power company to compete with the one who already has a line running to the consumer's house. The flip side of this is that their pricing is often controlled and their profits are capped.

As an industry for investment they usually offer some solid benefits. First, they generally pay dividends than are greater than the market at large. Second, their earnings and profits are very consistent, even in times of economic duress, so they are considered a defensive investment.

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